Homeland security/Law enforcement > 28. Checked Baggage Screening

By reviewing the appropriateness of the federal cost share the Transportation Security Administration applies to agreements financing airport facility modification projects related to the installation of checked baggage screening systems, the Transportation Security Administration could, if a reduced cost share was deemed appropriate, achieve cost efficiencies and be positioned to install a greater number of optimal baggage screening systems than it currently anticipates.

Why This Area Is Important

Since fiscal year 2006, over $6.8 billion has been made available to the Transportation Security Administration (TSA) for procuring and installing equipment to screen checked baggage for explosives at TSA-regulated airports. TSA procures explosives detection systems and deploys them to airports for installation in optimal configurations to, among other things, achieve efficiencies and capabilities to better detect terrorist threats.[1] To accommodate the installation of such systems, however, airports must often undertake facility modification projects. While TSA has sole responsibility for procuring and deploying screening equipment, the agency generally does not fully fund associated facility modification projects. These facility modification projects, which may be necessary or desired, include projects related to the installation of in-line baggage screening systemsan optimal configuration whereby one or more explosives detection systems are placed in-line with the baggage conveyor systems to expedite checked baggage screeningand generally require substantial and costly facility modifications. To offset the costs of such facility modification projects borne by nonfederal entities (typically airports or airlines), TSA enters into reimbursable agreements whereby the agency assumes financial responsibility for a portiongenerally 90 percentof an eligible facility modification projects costs to install baggage screening systems, subject to the availability of appropriations.[2]

[1]The term explosives detection systems includes both explosives detection systems (EDS), which use X-rays with computer-aided imaging to automatically recognize the characteristic signatures of threat explosives, and explosives trace detection (ETD) machines, in which a human operator (baggage screener) uses chemical analysis to manually detect traces of explosive materials vapors and residue. Optimal configurations achieve efficiencies by, among other things, enhancing baggage screening throughput, reducing the number of screeners needed, and reducing injuries.

[2]TSA generally uses two types of reimbursable agreementsletters of intent and other transaction agreementsto support airport facility modification projects related to the installation of checked baggage screening equipment. Consistent with statutory requirements, the federal cost share for a letter of intent must be 90 percent for larger TSA-regulated airports. See 49 U.S.C. § 44923. In contrast, other transaction agreements afford TSA flexibility in applying cost shares it considers appropriate to support a project. In practice, TSA generally enters into other transaction agreements at the 90 percent cost share applicable to letter of intent agreements.

What GAO Found

TSA has not conducted a study to determine if the 90 percent cost share it generally applies to reimbursable agreements supporting the installation of checked baggage screening systems continues to be appropriate given the current constrained fiscal environment. Absent direction from Congress that TSA conduct such a study, the agency currently has no plans to do so. According to senior TSA officials, the cost share agreements currently in place support good investment decisions. However, they did not provide analysis or clarifying details supporting this assertion. Moreover, TSA reported a shift in its strategic focus from completing optimal systems, such as in-line systems, to replacing and upgrading (i.e., recapitalizing) aging equipment. However, TSA identified that it will continue to support the deployment of integrated in-line systems, which may involve extensive facility modification projects, if the agency determines that such systems are an optimal and cost-effective solution at a particular airport.

GAOs work suggests that studying the current cost share arrangement is warranted and could help maximize federal resources dedicated for aviation security. To illustrate the potential impact that could be achieved if the cost share were to be adjusted, GAO reported in April 2012 that if TSA applied a 75 percent cost share to all reimbursable agreements it enters into in support of facility modification projects from fiscal years 2012 through 2030, the agencys anticipated expenditures for these modifications would be reduced by a total of roughly $300 million. GAO used the 75 percent cost share as a basis for comparison as it reflects the mandated federal cost share for letter of intent agreements entered into by TSA at larger TSA-regulated airports through fiscal year 2007.[1] This reduction in anticipated expenditures may enable TSA to install a greater number of optimal systems than it currently anticipates since, according to TSA officials, any costs not incurred by the federal government through a modification to the cost share would, consistent with applicable law, have to be used to support other or additional facility modification projects related to the installation of checked baggage screening equipment or for the procurement of such equipment.[2]

Based on data provided by TSA for GAOs April 2012 report, we reported that 76 percent of all TSA regulated airports were complete.[3] However, this figure includes 157 smaller airports that did not require in-line systems or facility modifications to be considered completely optimal, according to TSA.[4] Without the inclusion of these 157 airports, the total percentage of complete airports was 62 percent. Moreover, most of the facility modification costs incurred by TSA are in support of modifications to the largest airports for which only 45 percent were completely optimal.[5] Thus, studying the 90 percent cost share TSA generally applies could, if a lower federal cost share was deemed appropriate, result in a reduced federal financial commitment for any remaining facility modification projects related to the installation of checked baggage screening systems. Furthermore, as GAO has reported since March 2005, installing in-line systems can enhance security, increase screening efficiencies, and lower screening costs by, among other things, reducing the number of personnel needed to conduct baggage screening and work-related injuries. For example, in March 2011, GAO reported that TSA could realize up to $470 million in net personnel cost savings from fiscal years 2011 through 2015 from reduced full-time equivalent baggage screener positions as a result of installing more efficient systems, including in-line screening systems.[6]

In 2006, consistent with the Intelligence Reform and Terrorism Prevention Act of 2004, TSA commissioned a working group to examine and report on what an appropriate federal government/airport cost share should be for the installation of checked baggage screening equipment.[7] The working group, however, was unable to reach a consensus on an appropriate cost share formula, in large part because of the difficulties of measuring benefits, differing views on the federal role in funding capital investments related to checked baggage screening, and competing demands on the federal budget. While GAO acknowledges the challenges associated with developing cost share formulas, such as measuring associated benefits, conducting a study of the current federal cost share could help TSA respond to new budget realities by helping it identify new opportunities to achieve cost efficiencies for the federal government. If a study of the cost share TSA generally applies to reimbursable agreements shows that a reduction would be appropriate, the application of a lower federal cost share could enable TSA to support the installation of a greater number of baggage screening systems that best meet the needs of airports.[8]

In addition, the November 2010 report of the Debt Reduction Task Force, in discussing the costs of aviation security, noted that the main beneficiaries of transportation security enhancements are the users of the systems, which include airlines, airports, and passengers, who should pay for more of the costs.[9] A study could recommend adjusting the cost share to better reflect the relationship between the benefits of optimal checked baggage systems to airports and the share of costs to airports for installing those systems. Finally, conducting such a study would also be consistent with the House of Representatives Committee on Appropriations intention that TSA move aggressively towards a leaner organizational and mission approach to its screening and security mission, and its belief that there must be a better balance among personnel and technology, public and private capabilities, and increased use of risk-based strategies in organization, operations, staffing, and acquisitions.[10]

In studying changes to the federal cost share, considering the effect on and coordination with industry stakeholders would be important. For instance, in April 2012, GAO reported that representatives from 8 of 10 airports GAO visited opposed a reduction in the federal cost share for related airport modifications.[11] Their concerns related to, among other things, hardships that would be imposed on airports if they assumed a larger share of airport modification costs because of funding constraints. Airport representatives also reported having a backlog of capital projects or a preference for funding initiatives that would provide additional revenue, such as parking garages or larger areas for concessions. Nonetheless, representatives of all 10 airports also cited the additional advantages of in-line systems, including the reduction of passenger congestion in airport terminals and fewer instances of lost or stolen bags.

[2]In general, TSA has used the Aviation Security Capital Fund (the Fund) as its primary resource for supporting facility modification projects related to the installation of checked baggage screening equipment. The Fund, which is comprised of the first $250 million collected in passenger security fees each fiscal year, is available to support projects that will facilitate the deployment and installation of checked baggage screening equipment, but may also be available to support other security-related capital improvement projects. See 49 U.S.C. § 44923(a), (h). Historically, TSA has used the Fund solely to account for its share of a checked baggage-related facility modification projects costs. In fiscal year 2012 (and as requested for fiscal year 2013), however, TSA obtained authorization through its annual appropriation to use the Fund in fiscal year 2012 to procure and install checked baggage screening equipment, in furtherance of its recapitalization effort to replace aging checked baggage screening equipment. See Pub. L. No. 112-74, Div. D, 125 Stat. 786, 950-51 (2011). Consequently, in fiscal year 2012, the Fund was available for purposes other than reimbursing the costs of airport facility modification projects.

[3]To be considered complete, as TSA considers it and we define it for purposes of this report, an airport must have completed installation and activation of optimal systemsthat is, in-line or stand alone systems that best fit an airports screening needs without relying on temporary stand alone systemsacross the entire airport.

[4]TSA classifies the over 400 TSA-regulated airports in the United States into one of five airport security categories (X, I, II, III, and IV) based on various factors, such as the total number of takeoffs and landings annually, the extent to which passengers are screened at the airport, and other special security considerations. In general, category X airports have the largest number of passenger boardings and category IV airports have the smallest.

[6]These cost savings estimates were based on the assumption that all other nonpersonnel costs netted out to zero as was reported in GAO, Aviation Security: Systematic Planning Needed to Optimize the Deployment of Checked Baggage Screening Systems, GAO-05-365 (Washington, D.C.: Mar. 15, 2005). GAO does not know whether the cost savings as reported in 2005 will continue to be achieved in the future. Net cost savings account for the differences in acquisition, modification, installation, and operation and maintenance costs between existing systems replaced with more efficient systems at airports. GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011).

[8]Whether or not a reduction in the federal cost share applied to the reimbursable agreements will in fact result in the installation of a greater number of baggage screening systems depends upon whether airports or airlines will continue to undertake such projects with a reduced federal contribution.

Actions Needed

To better position TSA to achieve greater program efficiencies and support the installation of a greater number of optimal systems than currently anticipated, which could result in increased efficiencies and enhanced security, Congress may wish to consider taking the following two actions:

direct TSA to study, in consultation with relevant industry stakeholders, whether the 90 percent federal cost share that TSA generally applies to cost sharing agreements for eligible airport facility modification projects related to the installation of checked baggage screening systems is appropriate or should be adjusted; and

consider whether an amendment to current legislation, or enactment of new legislation, is necessary and warranted if it is determined that a change in the current federal cost share that TSA generally applies to these cost sharing agreements is appropriate.

Because TSA has revised its checked baggage acquisition strategy to focus more attention on recapitalizing aging equipment and less emphasis on the installation of in-line screening systems, GAO could not develop a precise estimate of the potential cost efficiencies associated with a change in the federal cost share. Nevertheless, based on information TSA provided for GAOs April 2012 report, GAOs illustration of the potential impact of reducing the federal share suggests that hundreds of millions of dollars could be made available to facilitate the installation of additional checked baggage screening systems. Moreover, because TSA stated that it will continue to support deploying integrated in-line systems, as appropriate, and GAO has reported such systems can improve security while possibly decreasing costs, a cost share study could identify opportunities for maximizing federal resources.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from the reports listed in the related GAO products section. To determine the impact of reducing the current federal cost share on the amount TSA pays for these modifications, GAO calculated estimates based on TSAs August 2011 projections of how much airport modifications will cost for fiscal years 2012 through 2030. Furthermore, GAO interviewed senior TSA officials about their current facility modification plans and perspectives on reducing the federal costs share. Table 20 in appendix IV lists the programs GAO identified that might have opportunities for cost savings or revenue enhancement.

Agency Comments & GAO Contact

GAO provided a draft of this report section to the Department of Homeland Security (DHS) for review and comment. In commenting on the draft, DHS said that the GAO estimate of $300 million in reduced expenditures for anticipated modifications is extremely high because 89 percent of airports are now complete for optimal baggage screening systems. The department added that the estimate does not fully reflect the shift in TSA focus to replacing and upgrading aging equipment, which are recapitalization projects that TSA fully funds. DHS also noted that even at the current 90 percent funding level, TSA is not receiving any applications from airports to install in-line systems. DHS also stated that they had previously requested a decrease in the cost share for letters of intent to 75 percent, but it was not included as part of the appropriation.

For our April 2012 report, GAO calculated the potential reduction in agency expenditures for anticipated modifications of roughly $300 million based on information TSA provided on the cost of modifications, which at the time represented their best estimate. As we reported, 76 percent of airports were complete. Further, as we noted above, most of the facilities modification costs occur at the larger airports for which we determined that only 45 percent were complete. TSA has provided updated information that 89 percent of airports are complete, however as we noted above, 157 of the airports designated as complete did not require facility modifications because of their smaller size and lack of need for in-line systems. Excluding these 157 airports and considering only the airports that might need facility modifications would reduce the TSA estimate for completed airports from 89 to 83 percent. Although potential cost efficiencies might be lower with the completion of more optimization projects since GAO issued its 2012 report, some degree of cost efficiencies could be realized if a reduced cost share was applied to the remaining projects.

GAO noted TSAs shift in focus from optimization to recapitalization both above and in its April 2012 report. Because GAO calculated the estimated reduction in expenditures for anticipated modifications based on information TSA provided for GAOs April 2012 report, the estimate portrays the shift in focus to the extent that the TSA information reflected it. Moreover, given that TSA is now emphasizing recapitalization, and it funds 100 percent of recapitalization costs, GAO believes this further underscores the need to seek opportunities for cost efficiencies on baggage system optimization projects.

TSA reported for our April 2012 report that it does not independently survey airport needs, but rather waits for airports to apply for optimal systems. Thus, it lacks sound data on the needs of remaining airports and why they are not applying, which could be due to many factors other than cost share, such as their financial willingness and competing airport priorities, such as construction projects. GAO continues to believe that all of these factors would warrant consideration in studying the cost share if the Congress directed TSA to do so, and that a cost share study could identify opportunities for maximizing federal resources.

Finally, regarding DHSs comment that it had previously requested a decrease in the cost share for letters of intent to 75 percent, we note that for fiscal years 2005 through 2007 TSA requested, and the respective Department of Homeland Security appropriations acts included, provisions establishing the federal cost share for letters of intent at 75 percent for certain airports. TSA also made the same request for fiscal year 2008, but TSAs appropriation for that year did not include a provision reflecting the 75 percent cost share. TSA has not made any subsequent requests for a reduced cost share, and attributes enactment of the Implementing Recommendations of the 9/11 Commission Act of 2007 as being a definitive statement by Congress on the issue.[1] Given the current fiscal environment as well as other security benefits and efficiencies GAO has reported on in its prior work, a study by TSA may better position the Congress to determine whether a modification to the cost share is appropriate.

For additional information about this area, contact Stephen M. Lord at (202) 512-4379 or lords@gao.gov.